Hotel development in Africa keeps growing – despite challenges

Bamburi Beach Hotel in Mombasa. PHOTO/COURTESYBy ENTERTAINMENT CORRESPONDENTnewsdesk@reporter.co.keHotel development activity in Africa is still rising in the face of the continent’s economic problems, showing a 13% increase in 2017, according to the annual survey by W Hospitality Group.The ninth edition of its Hotel Chain Development Pipelines in Africa has 36 international and regional contributors reporting almost 73,000 rooms in 417 hotels. The figures have grown each year, more than doubling since 2009.This year, bragging rights are shared; Marriott International, boosted by its merger with Starwood, comes top of the table in terms of number of rooms planned. But AccorHotels continues to lead – just – by the number of hotels in its pipeline. By country, Egypt is in first place with the highest number of hotel rooms in the on-site construction phase.The report also highlights many African countries faced a challenging 2016, with lower prices for oil and other commodities, devalued currencies and other negative factors. This may have affected confidence in the short-term, as the number of deals signed was 86, down from 121 in 2015.

A deluxe room at Kenya Bay Beach Hotel. PHOTO/COURTESY

Despite the slowdown, some countries benefited from cheaper oil imports and there was increased activity in southern and east Africa. In addition, more hotel chains established development offices on the continent, to address the fact that Africa is still massively under-provided with rooms.Growth is expected to be more muted in 2017, and financing and bureaucratic hurdles remain, but an increasing number of deals are coming to fruition on time: from only 26 per cent opening their doors on schedule in 2014, to 47 per cent in 2016.The report, along with all the challenges of developing new hotels in Africa will be discussed by industry leaders and government officials at theAfrica Hotel Investment Forum(AHIF).In sub-Saharan Africa, the number of pipeline hotels grew from 278 hotels in 2016 to 310 in 2017, an increase of 12 per cent, but the rate of growth slowing from 46 per cent in 2016.Macro-economic factors such as exchange rate uncertainty, recession and lower prices for commodities depressed several economies in sub-Saharan Africa, with a consequent slow-down in development activity – confidence is a critical factor for new fixed investment.In terms of room numbers, hotels in the North African pipeline have a higher number of rooms than those in sub-Saharan Africa, with an average of 220 rooms compared to 158 rooms. The average of all pipeline deals remains constant at approximately 175 rooms per hotel.Download the full report detailing the 2017 Hotel Chain Development Pipeline in Africa

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